Australian dollar close to record high and may continue climbing

THE dollar breaks through US97 cents overnight, as it reaches parity with the Canadian dollar.

THE dollar has broken through US97 for the first time in more than two years and could test its record highs as early as next week if interest rates rise and US recovery concerns intensify.

At 7am AEST, the dollar was trading at 96.93 US cents, slightly down from yesterday's close of 97.03 cents.

Mrs Osmond said cheaper imports meant retailers could keep prices low or cut them further, but that meant they had to sell more stock to make the same money - and in an environment in which traders already were discounting heavily.

"The big winners out of this situation are clearly going to be consumers," she said.

AMP Capital Investments chief economist Shane Oliver said Australia's biggest exporters - the mining industry - were typically the "losers" from a stronger currency, but the strength in commodity prices was offsetting currency losses as a "natural hedge".

 Yesterday's peak in the Aussie was its highest point since July 2008.

Westpac chief currency strategist Robert Rennie said the weakness in the US greenback that triggered the spike was driven by "very weak" consumer confidence.

Continued concern about the US recovery and heightened interest rate expectations have pushed the Aussie US8 higher this month.

"You get the sense that data is deteriorating again in the US," Mr Rennie said.

The Australian dollar's record of US98.5 was in 2007 and CBA's Mr Capurso said it could be tested next week if the expected rate hike on Tuesday was backed up by disappointing US jobs data, to be released overnight on Friday.

"It is possible, but things have got to go in the right direction," he said.

- With AAP